For Fitbit, snapping up Pebble removes a real competitor in its segments, but for Pebble, it will rue the day that the company apparently turned down a $740m takeover bid from Citizen – the Japanese watchmaker.

With the buy, Fitbit gains access to a team that designed the Kickstarter success, which saw Pebble raise around $30m from backers looking to snap up one of its designs. Pebble has turned its attention to activity tracking in recent quarters, expanding on its initial focus on notifications, although it appears that its heart-rate monitoring is not as accurate as it should be.

According to IDC figures quoted in the ReThink article, FitBit is doing okay, shipping 5.4 million gizmos in the third quarter of this year, blowing Apple out of the water – Apple Watch shipments crashed to 1.1 million units, about 5% of the market, in the third quarter, a huge year-on-year decline from 3.9 million and an 18% market share.

The current generation of smart watches and operating systems have overcome many of the early problems with battery life and limited functionality. The real problem is the lack of killer apps. Vertical apps like activity trackers and heart rate monitors fit really well into cheaper, one trick pony devices, as FitBit’s increasing sales figures show. And the all-in-one crown still belongs to smart phones. The gap between the two categories is closing, and in the process squeezing out smart watches.

Microsoft is the latest company to get into the smart watch business, or so the latest rumors say. It could be a way to give Windows a competitive boost in the mobile OS market, if Microsoft can integrate it into the ecosystem in an interesting way.

The hot smart watch at CES in January was the Pebble. It links to a smart phone via Bluetooth, allowing users see messages and alerts or control phone functions. Other manufacturers, such as Casio, were showing watches that did similar things although on a less ambitious scale.

Wearable tech is slowly entering the marketplace. That’s one of the potential benefits of the flex screen Samsung demoed at CES – it can put a larger, but less intrusive, screen on your wrist. Google Glass and other head-mounted displays and cameras could do the same thing, if the product is attractive enough. People already wear glasses and wristwatches so adding functionality to those devices is easy so long as the form factor doesn’t change.

Ear buds and Bluetooth earpieces are also ubiquitous these days, which tells you people will add tech to their ensembles if it truly enhances their lives. Earbuds took off with the Walkman thirty years ago as a way to listen to tunes without bulky headphones. Bluetooth earpieces let people talk on their mobile phones whenever they want, without tying up their hands or getting caught up in cords. I doubt, though, that the market for Bluetooth earpieces would have taken off as quickly as it did without the help of hands-free requirements for drivers.

The best way to introduce a new product (or service) into the market is to make it just like an existing one, only better. Adding convenient functionality to a wrist watch is a no brainer in that regard. But the operative word is convenient: it has to blend seamlessly into lifestyle and fashion choices, not dictate them.

“We're proud of it, it's a full blown consumer electronics product,” said Eric Migicovsky, CEO of Pebble, as he introduced the Pebble smart watch at CES, promising a shipping date of 23 January 2013.

It's a real watch. It sits on your wrist, tells the time and you can swim with it. It's also “a connected device, which talks to your smart phone,” Migicovsky explained.

If the production units perform like this morning's demo, Pebble has a shot at being the first mass market, non-geek smart watch. It's limited to functions that make sense to have on your wrist – receive short text messages, switch songs on your iPod, see brief push notifications and, yes, tell time. The heavy lifting is done on your smart phone.

The Pebble has a variety of interchangeable watch faces and is open to outside developers to design more. With a push of a button you can change from an analog face, to digital and to more creative displays like “fuzzy time” or pure binary.

Beyond the basics, it uses its 144 by 168 pixel e-paper display to show email, text messages and other notifications that are routed through an app on your Android or iOS device to Pebble via Bluetooth. It'll tell you when a call is coming in or track a run workout via the GPS chip on your phone. There's a backlight that you can turn on with a flick of your wrist.

It can act as a control mechanism too. For example, it'll let you select music and see what's playing on your phone or iPod Touch. The battery will last a week, then it needs a couple of hours of recharging via a magnetic inductance cord that plugs into any USB port.

The first 85 thousand watches – a six to eight week backlog – will go to the people who backed the project on Kickstarter. Then they'll start selling to the public via the web at a $150 price point. For now, there's no other retail distribution.